Gabriel Resources (GBRRF) is a Canadian company focused on assessing, exploring, and developing gold, silver, and copper mines in Romania. It is currently working on two mining projects, Rosia Montana and Bucium, which are both located in Romania.
Its principal asset, the Rosia Montana Project, is a world class mine. They have a controlling interest, to the tune of 80.69%. The remaining 19.31% is owned by CNCAF Minvest S.A., a Romanian government-owned mining enterprise. The project is the largest undeveloped gold deposit in Europe. The Rosia Montana project has proven reserves of 10 million ounces of gold and 47 million ounces of silver. It is immense and offers huge economic and social potential.
It must, however, overcome some obstacles before mining can begin and profits can be realized. Non-governmental organizations, also known as NGO’s, have been opposing the development for years on environmental grounds. However, since the developers are first rate and focus on responsible and sustainable development, they should be able to create a mine with as little pollution as possible. Gabriel has a record proving its commitment to the highest standards on engineering, environmental, cultural, and social issues.
Another roadblock is that Gabriel is still awaiting an environmental permit that must be approved by Cabinet. The Technical Analysis Committee needs to give Cabinet a positive recommendation beforehand.
However, these regulatory obstacles are not likely to burden the project long-term. Romania currently has a negative trade balance and the poverty rate is at around 25%. Romanian citizens have voted for the mine’s development, as it would create thousands of jobs, add to foreign investment, bring revenue into Romania, and help sustain cultural heritage. It is expected to contribute $30 billion to Romania’s GDP.
Additionally, Gabriel engages with stakeholders, including the Romanian government, to understand their issues and concerns. They have stated their commitment to the preservation and restoration of archeological work and artifacts in areas surrounding the mine for the duration of the mine’s operation. This is a further indication that the approval of the mine is not so much an “if” but a “when.”
Romania’s political scene has experienced a great amount of turmoil recently. Throughout 2011, its government continued to follow an overall economic policy in line with the strategy agreed upon with the IMF. The public, however, withdrew support of government activity in early 2012 in response to austerity measures. There have been two major overhauls of Cabinet constituents just since February, with new parliamentary elections being held in November. The government needs to satisfy the IMF, its creditor and support projects that will ultimately benefit the country. Since the IMF is still supporting the Romanian economy, it will continue to require government progress in allowing foreign companies to manage local projects.
The short life span of government in Romania is something to keep in mind, as it will influence the future development of the mine. But if the mine is as solid as it appears, it will be tremendous for the country.
Gabriel is currently under $2 per share, but could easily multiply five-fold if development is approved. For close to a year, the stock was trading fairly consistently at around $8 and peaked at $9. However, fear and speculation on the mine approval, as well as the overall economy, led to the stock’s short-term fall.
There is huge upside potential for Gabriel. It has a very low cost per ounce to mine compared to other juniors miners, which means it will have huge profit margins once the project begins. With gold and other hard assets beaten down due to a worldwide liquidity crunch, we expect growth to be mind blowing.
